Welcome back to Pathfinders podcast series from RBC Capital Markets, where we uncover the key trends and catalysts shaping the fast moving world of biotech and pharma. I'm your host, Joe Coletti, and this episode will be focusing on next generation therapeutics and talking with special guest Curt Gustafson. Curtis, CFO of Omnia AB, a company that licenses cutting edge discovery research technologies to industry partners for the discovery of next Gen therapeutics.
This platform is powered through something the company calls biological intelligence, using proprietary engineered transgenic animals to create antibody candidates for human therapeutics. Curt, it's great to have you with us today. Thanks, Joe. It's great to be here. Let's start with getting a little bit more background on the ABS mission and vision, and maybe you could also talk about how the company has kind of become a leader in the transgenic animal technology.
Yeah. So we have a very clear mission, which is to help the biotech and pharmaceutical industry rapidly discover innovative therapeutics by providing them cutting edge discovery research, technology. The business model is a licensing model where we license our technology to both the pharma and biotech industry in order for them to go find these next generation therapeutics. At the heart of the technology is our transgenic animals, which have been genetically modified to create antibodies with fully human sequences.
The ability of the immune systems of our engineered transgenic animals to create these optimized antibodies for human therapeutics is what we call biological intelligence. The intelligence is built right into the animals, and we believe that this is a better way to generate antibodies because they're naturally optimized in our animals and they preferentially select antibodies with excellent specificity as well as develop ability characteristics.
Now, you asked, you know, how do we get here in terms of how the company was created. So we just went public about a year and a half ago. But the predecessor companies that make up Omnia have been around for quite a while. The the full technology stack that we have today was assembled through six acquisitions that brought us this full suite of technologies, including antigen design, our transgenic animals and proprietary screening technology.
And they all they all fit perfectly together to help accomplish our mission of helping our partners find therapeutics to treat disease. Can you talk a little bit more about the technology behind Omni EMS platform and particularly the differentiating features that it has? Yeah. So we are the industry's only four species antibody discovery platform, and I think it's really the breadth of this platform that differentiates us.
We've got mice, rats, chickens and cows and in many cases we have multiple variations of each of these animals. So specifically, kind of from a product line standpoint, we've got omni rat omni chicken and omni mouse. These three animals have been genetically modified to generate antibodies with human sequences, and then we've got Omni Flik and Omni click these are fixed or common light chain rats and chickens which are used to discover by specific price, specific or even multi specific antibodies.
And then we've got Omni Tau. This is our cow inspired technology. Cows make some unique antibodies with unique structural characteristics that are being explored for some challenging targets. And our our latest launch is something called Omni DAB. This is a chicken that creates a llama like antibody with the human sequence. So llamas also make really unique antibodies, unlike a classic antibody that has two heavy chains and two light chains.
Llamas make antibodies. They have only two heavy chains, and they can also be expressed as a single domain antibody, which kind of the unique part about this is it's much smaller than than a regular antibody and can be used in some unique ways. So think about passing through the blood brain barrier or maybe a different delivery mechanism such as the ability to be inhaled.
So we're also seeing some of our partners use them in other areas like diagnostics or aeronautics or even in CAR-T. Given their unique compact format. So, you know, I think you're you could find probably pieces of our technology at other companies. But the diversity of our product offering and the fact that it's all put together in a single company and the fact that it's proven is what causes companies to come to us to use our technology.
So interesting. How does your licensing model work? How does your partnership base sort of across biotech and pharma work with in the omni-man ecosystem to develop antibody derived therapeutics? Yeah. So as you point out, this is a licensing business and we've we've designed our licenses in such a way to align the kind of economic interests that we have along with the scientific interests of our partners.
So our typical deal includes some sort of upfront license fee, which gives our partners access to the full suite of technologies. And then there's usually milestone payments which are typically a function of, you know, achieving certain events like starting clinical trials. And eventually, we hope royalties on commercial sales. And the alignment that I'm talking about is the fact that our partners really don't pay unless they have success.
So, you know, usually usually when they have success there, they're sort of happier to write that that check. We also have a very flexible business model in terms of how we work with partners. After signing a license with us. In many cases, partners can do most of the work themselves. We can ship most of our animals to our partners and they can do the immunization and screening themselves.
You know, if they want us to do the work, we can do it. And in that case, we'll learn service revenue for the work that we provide. But, you know, the goal is really to make the access to the technology relatively cheap as we want to encourage our partners to use the technology as much as possible. This is a shots on goal business.
So the more the technology is used, the more shots that we have to actually get a drug approved from one of our partners. And obviously that will come with the revenue that we're searching for. I should note that for our chicken platforms, we can't chip ship chickens. So, you know, in that case, we do all of the work with chickens in-house.
Chickens are the one exception. Yeah, chickens are the one exceptions, I guess. Cows we are. We also don't ship cows. So I should add that as well. So I wanted to pivot maybe to AI and machine learning tools. How important are they? Have they been will they be for therapeutic discovery and optimization throughout your various technologies and capabilities?
Yes. So AI and machine learning have been part of who we are since the very beginning. Last year we launched kind of a branded product called Omni Deep, which is our branded suite of in Silico tools, which are really woven throughout our various technologies. These tools are kind of a part of almost every part of our workflow, starting at the very beginning, where we use AI to design the antigen that will give to our animal in order to elicit the most robust immune response that we can.
We also use AI machine learning in our screening technology, where the AI and machine learning tools will actually select antibody candidates that are non-obvious to sort of the classical methods that we used to use. And then we'll use it at the very end of the process for optimization and where we can identify variants and antibodies with improved characteristics.
So, you know, at this point, AI and machine learning are really just a part of our standard workflow. And in fact, today at a protein engineering conference up in Boston, one of our lead scientists, Bob Chen, is giving a talk showcasing a case study on the technical synergies between machine learning tools and our transgenic animals. And he's he's talking specifically about the way that we can enhance antibody discovery workflows in by specifics.
So I want to stay on AI maybe for a bit a minute since we're talking about it, but zoom out on the sector a little bit more and think a little bit big picture. How do you think or how are you thinking about advances in AI and how they might revolutionize other aspects of either what you do or the biotech sector sort of at large?
Yeah. So I think clearly advances in AI are already impacting all areas of the biotech sector. I think there's there's probably a lot of hype out there and maybe some overexuberance about where we are today. But there's no question that A.I. is going to be a part of shaping drug discovery and drug development. You know, I've talked a little bit about what we're doing with AI and machine learning already with our R&D program.
You know, we're going to continue to evolve those tools. It's definitely going to be a part of the tool kit. And, you know, we'll certainly evolve as time progresses. Staying, staying in the big picture. Think about the key thematics, particularly at the macro level, but there are obviously others as you guys think about, you know, the macro environment.
Some of the other key trends are drivers that are impacting you. Are there ones that you think are going to be, you know, at the top of the list that you're paying attention to, you're watching closely that you'll be dealing with, you know, over the medium and long term the most? You know, I think there's a few obvious things that we could talk.
You know, EDCs have been really hot metabolic areas. Obesity is obviously something that's really big right now. We get a lot of questions about funding environment, but maybe maybe something that that most folks maybe don't think about a little bit more is is really on the regulatory or governmental side. And that has to do with the Inflation Reduction Act.
So one of the things that that happened with the inflation reduction Act is it gives Medicare the ability to negotiate prices with pharmaceutical industry and what they have done with the inflation reduction Act is is actually separated out the length of time before they'll do that negotiation between large molecules and small molecules. And so, you know, what they've said is that for for large molecules, we won't those won't become eligible for price negotiation for 11 years, whereas for small molecules, it's it's more like seven years.
So that's a big deal and a big difference when you're thinking about drugs that could be selling hundreds, if not billions of dollars a year before they become subject to price negotiation. In fact, pharma, the trade association pharma did a survey, I believe, last year with their constituents. And what they found out was that a majority of those companies are actually thinking about shifting research dollars away from small molecules.
Presumably to large molecules in direct result of this Inflation reduction Act and the potential sort of economic changes that that implies. So I want to close by talking a little bit about what investors may not be paying enough attention to. You know, it could either be about your company larger picture in the biotech space, but we always like to ask this question directed more towards the capital markets.
CROWD Yeah. Other are things that you're watching or there, whether they're trends or themes or things that your company are doing that you think that they need to really, really pay more attention to, as in the in the weeks, months, years ahead. You know, the one thing that we're kind of watching is, you know, kind of going through Congress right now is the bio secure act and what's really going to be the implication there.
There are a number of Chinese companies that are ubiquitous with the pharmaceutical industry in terms of the number of companies that that use these companies for various stages of either research or clinical development or manufacturing. And this bill is kind of working its way through Congress right now. It's something to keep an eye on because I think it definitely will have an impact on the industry.
We're already seeing companies make choices in terms of deciding who they should be using as suppliers for various aspects of their business. And so there will be winners and losers as a result of this legislation. And so that's something just to keep an eye on. Curt, it's been a real pleasure having you here. Thanks so much for being on the podcast.
Yeah, great to be here. Thank you. That's all for our conversation today. Thanks again for listening to Pathfinders and BioPharma brought to you by RBC Capital Markets. Please remember to subscribe to get more great content and be alerted about future episodes. This episode was recorded on May 15th, 2024. If you'd like to learn more or continue the conversation, please visit RBC.
Kim Dotcom Forward slash BioPharma. See you next time. This content is based on information available at the time it was recorded and is for informational purposes only. It is not an offer to buy or sell or solicitation. And no recommendations are implied. It is outside the scope of this communication to consider whether it is suitable for you and your financial objectives.